A sovereign state in free association with the United States (Compact of Free Association).
12% Business Profit Tax (BPT) on net income for PGST-registered businesses (effective 1 January 2023, replacing the prior 4% Gross Revenue Tax); businesses under USD 50,000 annual gross income are exempt from GRT/BPT but pay a business license fee instead.
Progressive wage tax: 6% on the first USD 8,000 of gross wages, 12% above that, with no tax-free threshold.
10% Palau Goods and Services Tax (PGST).
Individual tax residency requires at least 183 days of physical presence in Palau during a calendar year (each day counted, including fragmented stays). Below that threshold, an individual is generally treated as a non-resident and taxed only on Palau-source income. Sources flag some ambiguity in the underlying texts between a purely territorial model and elements of worldwide taxation for residents - confirm the precise scope directly with Palau's Bureau of Revenue and Taxation for any specific fact pattern rather than assuming a single clean rule.
No Controlled Foreign Company regime was identified in available sources for Palau. Palau residents and citizens of countries with their own CFC rules (including the United States) remain subject to their home country's CFC attribution rules regardless of Palau's own lack of a regime.
No statutory thin capitalization or interest-limitation rule was identified in available sources.
No domestic FBAR/Form 8938-equivalent requiring Palau residents to self-report their own foreign accounts was identified in available sources this session. Institutional-level FATCA/CRS participation status was not independently confirmed this session. Separately and independently of Palau law, US citizens and Green Card holders with Palau accounts remain obligated to file FinCEN Form 114 (FBAR) once aggregate foreign accounts exceed USD 10,000, and potentially Form 8938 - this is a materially significant point for Palau specifically given its Compact of Free Association relationship with the United States and resulting close cross-border ties, but the US filing obligation applies based on the taxpayer's own US person status, not on Palau's domestic law.
Palau does not maintain an extensive network of double taxation treaties, per available sources reviewed this session, including a direct check for a Palau Bureau of Revenue and Taxation treaty list, which did not surface one. Given Palau's Compact of Free Association relationship with the United States and its small, US-dollar-based economy, a minimal or nonexistent DTA network is the most consistent reading available, though this is an inference rather than a primary-source-confirmed count.